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The EU electronic money institution (EMI) licence does not survive PSD3 as a separate category. The Second E-Money Directive (EMD2) is repealed, issuing e-money is added to the list of payment services as service 8, and EMIs become payment institutions authorised to issue e-money. Their business continues, but each EMI must show its regulator that it meets PSD3 within the transition period, and its new authorisation must list every service it provides.
The Council adopted its first reading position on PSD3 on 29 October 2026. Once Parliament approves the text and it is published in the Official Journal, PSD3 enters into force 20 days later and applies after 21 months, with up to 27 months for existing institutions to complete the process. Our guide to PSD3 re-authorisation for payment institutions and EMIs sets out that timeline in full.
The two directives grew up separately. EMD2 dates from 2009 and PSD2 from 2015, and over time the activities converged: most EMIs also execute payment transactions, issue cards and run accounts, and most of the rules on conduct, safeguarding and security overlap. The Commission's 2023 proposal argued that two parallel licences created inconsistencies in supervision and gave firms room to choose the lighter path.
PSD3 keeps the features that make e-money distinct and moves everything else into one regime. In practice that means one authorisation framework, one safeguarding rulebook and one set of conduct rules in the directly applicable Payment Services Regulation (PSR), whichever services a firm provides.
The rules that define e-money as a product are kept. An EMI that becomes a payment institution under PSD3 continues to:
For customers the product looks the same. The change is in how the institution is authorised, capitalised and supervised.
Article 5 of PSD3 sets initial capital by service, and the amounts are added together where a firm provides services in more than one band.
| Business model | EMD2 today | PSD3 |
|---|---|---|
| E-money issuance only | EUR 350,000 | EUR 250,000 |
| E-money plus core payment services | EUR 350,000 | EUR 400,000 |
| E-money plus money remittance only | EUR 350,000 | EUR 290,000 |
| E-money plus payment initiation | EUR 350,000 | EUR 300,000 |
Ongoing own funds for e-money stay at a minimum of 2% of average outstanding e-money under Method D. Where the institution also provides the core payment services, it holds the sum of the payment services requirement and the e-money requirement. A typical EMI running wallets, cards and transfers will therefore hold a little more initial capital than today, and most already hold far more in practice.
Under EMD2 an EMI could hold funds received for e-money for up to five business days before they had to be safeguarded. PSD3 removes that difference. Funds still held at the end of the business day after receipt must be in a separate account at a credit institution, or at a central bank where that central bank allows it, or invested in secure, liquid, low-risk assets approved by the home regulator. The insurance or comparable guarantee route remains available.
Three further points matter for EMIs:
Opening a second safeguarding account can take months, so this is the item to start first. Our safeguarding practice arranges and documents those accounts.
This is the change most likely to catch an EMI out. Under EMD2 an EMI may provide payment services linked to its e-money business, and many hold permissions that are described broadly. Under PSD3 the authorisation lists each Annex I service the institution provides, and only those services are permitted.
| PSD3 Annex I service | Typical EMI activity |
|---|---|
| Cash placed on or withdrawn from an account | Card cash withdrawals, top-ups at retail points |
| Execution of payment transactions | Transfers from wallets and accounts, SEPA and card payments |
| Issuing payment instruments | Debit and prepaid cards linked to the account |
| Acquiring payment transactions | Merchant acceptance and settlement |
| Money remittance | Transfers without a payment account |
| Payment initiation and account information | Open banking features |
| Issuing e-money (service 8) | The core e-money product |
Before preparing the file, map every product line, including white-label and partner programmes, against this list. A service missed in the file is a service the institution cannot provide once the transition ends.
The effect of PSD3 depends on the business model. These examples show how the service list and the capital add up for three common EMI types.
A consumer app holds balances as e-money, issues debit cards on the balance and lets customers send money to other accounts. Its PSD3 authorisation lists issuing e-money, execution of payment transactions and issuing payment instruments, and probably cash withdrawal for ATM use. Initial capital is EUR 250,000 for e-money plus EUR 150,000 for the core payment services, a total of EUR 400,000, with own funds calculated under both methods and added together.
A firm issuing gift and prepaid cards sold through retail distributors, with no transfers between customers. Its authorisation lists issuing e-money and, if cards can be used at merchants, issuing payment instruments, which sits in the core band. The winding-up plan carries most of the weight here, because it must explain how holders redeem e-money bought through each distributor if the programme closes.
A B2B platform holding client balances for marketplaces and paying out to suppliers. Its authorisation lists issuing e-money, execution of payment transactions and possibly acquiring if it collects card payments for merchants. Safeguarding is the main work item: the next business day rule and the expectation of more than one safeguarding bank apply to large, fast-moving balances.
Firms that complete steps one to four in 2027 will be ready to file as soon as their regulator opens its process. Our regulatory compliance team runs this as a fixed project with the client's finance and compliance leads.
Several member states let smaller EMIs operate under a national waiver in Article 9 of EMD2, with lighter capital and governance requirements. The agreed PSD3 texts recognise that these institutions may face the full regime for the first time and give them a longer transition than fully authorised EMIs.
A waived EMI should start by checking three things: whether its outstanding e-money and volumes keep it within any successor exemption its home state adopts, whether it can meet the full capital and safeguarding rules if not, and whether a sale or merger is a better route than re-authorisation. The UK's own registration regime below the thresholds is separate and unaffected.
PSD3 adds a winding-up plan to the authorisation file for any institution providing the core payment services or issuing e-money. It must be adapted to the institution's size and business model, and cover how customers are repaid and how critical activities run by outsourced providers, agents or distributors continue during an orderly exit.
For EMIs with large distribution networks, such as prepaid card programmes sold through retail, the plan has to explain what happens to e-money held through each distributor and how redemption works if the network stops. The governance section of the file also covers how agents and distributors are selected, monitored and recorded on the register.
Firms planning an EU e-money business often ask whether to apply now under EMD2 or wait for PSD3. The answer depends on timing. A licence granted now will need to go through PSD3 re-authorisation within the transition, but regulators are already reviewing new files against the direction of PSD3, so a file prepared to the new standard today carries across with little extra work.
| Situation | Practical approach |
|---|---|
| Launch needed in 2027 | Apply now, building the file to the PSD3 standard, including the winding-up plan and next-day safeguarding |
| Launch flexible, after 2028 | Prepare now and apply as PSD3 takes effect in your chosen member state |
| Speed matters most | Consider acquiring an authorised institution, with the PSD3 work as part of the deal |
Our comparison of EU licensing jurisdictions and our guides to the Lithuania EMI licence and the Netherlands EMI licence show how individual regulators assess files today.
Under MiCA, an e-money token (EMT) may only be issued by a credit institution or an EMI. PSD3 keeps that link: a payment institution authorised for service 8 can issue EMTs under MiCA, and the agreed texts coordinate the two regimes. An EMI that issues an EMT today should make sure its PSD3 file covers the token programme, including the reserve, redemption and safeguarding arrangements MiCA requires. Our guide to issuing an EMT or ART under MiCA covers the token side.
As a separate licence, yes. PSD3 repeals EMD2, makes issuing e-money payment service 8, and turns EMIs into payment institutions authorised to issue e-money.
Not immediately. They keep operating during the transition, up to 27 months after PSD3 enters into force, but must show their regulator that they meet PSD3 to keep it.
EUR 250,000 initial capital for issuing e-money, plus EUR 150,000 if the institution also provides the core payment services. Own funds remain at least 2% of average outstanding e-money.
By the end of the business day after receipt, against up to five business days under EMD2.
Yes. A payment institution authorised to issue e-money can issue e-money tokens under MiCA, as EMIs can today.
No. PSD3 is EU law. UK EMIs are affected only through EU subsidiaries, which go through the process in their home member state.
Get in touch: WhatsApp +44 7563 115980, Telegram @buckinghamcapital or [email protected].
This article is general information, not legal advice. Requirements change, and the regulator’s own publications take precedence.
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